UK nuclear subsidies 'illegal under EU law'

posted by Paul Togneri | March 21, 2013

SNP MEP Alyn Smith has called for a wholesale review of how the UK government proposes to subsidise nuclear power after it emerged today that the UK government is barely in preliminary talks with the European Commission to authorise the subsidy despite giving planning permission for new nuclear developments just this week.

The UK proposes to subsidise nuclear via a mechanism known as "contracts for difference" (CfDs) which under EU state aid rules will need to be approved by the European Commission.

Alyn, himself a lawyer to trade, has been working on how CfDs can possibly be compatible with state aid rules and has had his view today confirmed- they're not, and any chance of changing state aid rules to make them work will require agreement from all other member states.

Alyn said:

"I find it staggering that the UK government can give planning permission to new nuclear power developments, albeit in England, when the legal and financial basis of the proposed subsidy have not been signed off.

"This is a massive uncertainty hanging over the projects, and at a time of austerity it simply staggers me that the UK government could proceed in this reckless fashion when it seems clear the taxpayer will pick up the tab.

"My group in the European Parliament has been at the forefront of probing the murky world of nuclear subsidy, but this has taken some beating. I cannot for the life of me see how CfDs can possibly be permissible under EU law, and while anything is possible eventually, it will take time and negotiation, and all the while the project ticks away.

"The commercial risk premium being charged on this project must be immense, and we need to see a lot more clarity on how new nuclear will be subsidised. I'm glad Scotland is making so much better a job of kicking our renewables revolution rather than being shackled to this old and expensive technology."